Appeals court clears Wells Fargo of elder abuse charge

By Angela Underwood | Jul 1, 2017

A California appeals court recently affirmed that a major bank did not did not commit elder abuse when selling off the appellant's property.

SAN FRANCISCO – A California appeals court recently affirmed that a major bank did not did not commit elder abuse when selling off the appellant's property.

Seventy-eight-year-old James C. Hilliard’s property, which was sold by Wells Fargo to Atalaya Capital Finance after his bankruptcy, did not violate the Elder Abuse and Dependent Adult Civil Protection Act, according to the California First District Court of Appeal. The June 1 ruling ends the 2015 claim by the California resident, who alleged the bank assisted in ceasing his property for wrongful use with the intent to defraud.

The argument dates back to 2003, when Hilliard was the principal shareholder for a set of radio stations named the James Crystal Company. Hilliard borrowed $18.9 million from Wells Fargo but defaulted on the loan agreement by 2004. However, the bank failed to foreclose on the property for six years and proposed a settlement in 2010 that included the sale of Hilliard's property Crystal Springs Ranch.

Though Hilliard sold the ranch for $5.5 million and gave the funds to Wells Fargo, the bank said the amount did not fulfill the 2010 proposal. At the time, Kevin R. Harbour was the managing agent for Wells Fargo. In 2012, Harbour sent Hilliard an email that if Wells Fargo was given $2 million from the sale of James Crystal Companies, the loan would be considered paid in full.

But Hilliard blamed the default on the inability “to obtain government approvals necessary to sell one of the radio stations by March 31, 2012, which would delay completion of the Bank’s settlement proposal,” according to the appeals court decision. Hilliard said he was never told by Harbour of the mandatory date of sale. If he had, he alleges that he would paid the money owed in a timely manner, but because he did not pay, Wells Fargo sold the loan to Atalaya Capital Finance.

“As the bank sees it, the primary harm Hilliard complains of is not his personal right under the elder abuse statute, but a derivative right belonging to the companies, a limited liability corporation not protected by that statute, and Hilliard has no right to sue individually,” according to the appeals court decision

The appeals court affirmed the original trial court decision that Wells Fargo did not take advantage Hilliard.

“As we have said, Hilliard’s circular argument—that the duty breached by the Bank is owed to him personally, and not just as a shareholder, because he is an elder and elder abuse is by definition a personal claim—simply ignores the obvious fact that his claim does not originate in circumstances independent of his status as a shareholder in the companies, and his claim therefore cannot be deemed personal,” the appeals court said in its decision, adding Wells Fargo are awarded costs.

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First District Court of Appeal California Wells Fargo & Company

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